Judge appoints mediator in Microsoft antitrust case

CBS.MarketWatch.com

WASHINGTON (CBS.MW) -- Two weeks after a federal judge slammed Microsoft for operating like a monopoly, the government and the software giant have an opening to mover closer in the antitrust case.

U.S. District Court Judge Thomas Penfield Jackson Friday named a prominent Chicago jurist to serve asa mediator in the landmark Microsoft trial, possibly opening the way to a voluntary settlement of the trial.

The appointment of Richard Posner, the respected but controversial chief judge of the U.S. Seventh Circuit Court of Appeals, raised eyebrows among observers of the year-long Microsoft case. A leading exponent of the Chicago school of economics, which advocates a stringently free-market economic analysis of legal issues, Posner is an influential authority on antitrust law. See Posner profile.

Judge Richard Posner

Antitrust experts said Posner would be unlikely to advocate a break-up of Microsoft or major divestitures if he believes the company violated antitrust laws. But as a mediator, Posner will have no power to enforce a judgment on the government or Microsoft.

The Justice Department is eager to meet with Posner to "discuss the serious competitive problems identified in the court's findings of fact," Talamona said. "The department has always been willing to seek a settlement that would promote competition, innovation and consumer choice."

Microsoft spokesman Mark Murray said the company viewed Posner's appointment as "potentially a very positive step toward possibly resolving this case. We look forward to working with Judge Posner to try to reach a fair and responsible solution."

"It's a very interesting choice. Posner's strength clearly is that he is an expert on antitrust law. And he clearly has a point of view," said George S. Cary, a Washington antitrust lawyer and a former Federal Trade Commission official.

"There's no more fertile, creative or sophisticated mind in the law today than Richard Posner," said Albert Foer, president of the American Antitrust Institute, a Washington-based think tank.

'Chicago type'

But Foer, whose organization advocates a more aggressive antitrust agenda, worried that Posner is "very conservative and too much of a Chicago type."

Other Microsoft critics were more blunt. "He's an apologist for monopolists," said James Love, director of the Consumer Project on Technology.

But Love suggested Jackson may be attempting to shore up the likelihood any subsequent rulings will pass muster with the U.S. District Court of Appeals if there is no settlement. The appeals court has overruled Jackson before on Microsoft-related matters.

"Jackson may be trying to position himself for the appeal. Posner is a god to the appeals court. By appointing Posner, it kind of rubs off on Jackson," Love said.

Robert H. Lande, a law professor at the University of Baltimore, said selection of Posner. "It was a shrewd move by the judge to pick a respected conservative like Posner," Lande said.

While Posner is conservative, he does believe in enforcing antitrust laws, Lande said. With that in mind, it will be difficult for Microsoft to reject a mediated solution if even Posner believes the software giant broke the law, Lande said.

No guarantees

The appointment of a mediator doesn't guarantee a settlement will occur. The trial will move onto the next phase while any settlement talks take place. Jackson has ordered both sides to file written briefs explaining how to apply antitrust laws to his findings of fact. He has also set oral arguments for Feb. 22, making a final judgment likely by March or April if no settlement is reached.

Jackson left the scheduling of any meetings up to Posner, who has yet to make arrangements to meet with the parties.

Jackson's decision to split the verdict into a two-phase process was viewed as an effort to encourage a settlement. But the one-sided findings, which appear to make a judgment against Microsoft nearly inevitable, were seen creating more difficulty for the two sides to find common ground.

In remarks earlier this week on ABC's "Good Morning America," Microsoft Chairman Bill Gates said the company would be willing to sit and discuss "any sort of resolution that could come along."

But, at the same time, Gates and other company officials have given every indication that the company's Windows operating system remains sacrosanct. The government's case centered in large part on Microsoft's decision to tie its Internet Explorer browser into Windows, describing the move as an anti-competitive effort to sideline Netscape's rival browser.

In remarks to shareholders last week, Gates said limitations on what Microsoft can add to Windows would rob the company of the ability to define its own product -- limitations "no company should accept ... on their ability to innovate."

Amicus Curiae

In another surprise move, Jackson appointed Harvard law professor Lawrence Lessig to serve as his amicus curiae, or friend of the court adviser, on the case. A previous attempt by Jackson to appoint Lessig as a "special master" to examine technical issues was successfully challenged by Microsoft, which accused Lessig of bias.

Jackson also invited the Justice Department and Microsoft to each designate an amicus curiae of their own choosing. The 19 states that have joined the Justice Department in the suit can also choose a single amicus curiae.

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